TECHDYNE , INC.
STOCK OPTION AGREEMENT
AGREEMENT, dated this 18th day of May, 1998, between TECHDYNE,
INC., a Florida Corporation (hereinafter called the "Company"), and
XXXXXX XXXXXX & COMPANY, INC. (hereinafter called the "Optionee").
WITNESSETH:
WHEREAS, the Board of Directors of the Company authorized the sale
of an option ("Option") to the Optionee to purchase 500,000 shares of
common stock, par value $.01 per share ("Option Shares"), of the Company
at $4.75 per Share ("Option Price"), such Option to be exercisable for
one year through May 17, 1999.
WHEREAS, the Optionee is willing to accept said Option and to be
bound by the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and of the
mutual covenants herein contained and other good and valuable consider-
ation, the receipt whereof is hereby acknowledged, the parties hereto,
intending to be legally bound hereby, agree as follows:
SALE OF OPTION:
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1.1 The Company sells, assigns and delivers an Option for 500,000
Option Shares to Optionee, upon the terms and conditions set forth
herein, for a cash consideration of $150,000 payable as follows:
(i) $10,000 by June 30, 1998;
(ii) $10,000 by July 31, 1998; and
(iii) The balance on or before August 31, 1998.
1.2 No part of the Option is exercisable, notwithstanding part
or installment payments have been made to the Company by the Optionee,
until the entire $150,000 consideration is paid.
1.3 The number of Option Shares above stated, and the Option
Price thereof, shall be subject to adjustment from time to time as
provided herein.
PAYMENT FOR SHARES
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2.1 The Option Price for the Option Shares to be purchased pur-
suant to each exercise of the within Option shall be paid to the
Company by the Optionee in full in cash or by certified or bank
cashier's check at the time of such exercise of the Option.
EXERCISE OF OPTION
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3.1 The within Option is exercisable only to the extent provided
herein during the term of this Option, which is for a period of one (1)
year, terminating at the close of business on May 17, 1999 ("Expiration
Date").
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3.2 The Option is exercisable, subject to the terms hereof, in
amounts equivalent to no less than 100,000 Option Shares per exercise
up to the Expiration Date. The Company may delay the exercise of any
Option if it determines that the Option Shares are required to be
listed, registered or qualified on any securities or Nasdaq stock
exchange. The Company shall not be obligated to deliver any Option
Shares until such Option Shares have been so listed, registered or
qualified on any securities or Nasdaq stock exchange (or authorized
for listing, registration or qualification upon official notice of such
exchange). Any delay under this Section 3.2 shall not extend, modify
the exercisability of the Option or otherwise affect the Expiration
Date.
3.3 At least five (5) days prior to the date upon which any portion
of the within Option is to be exercised, the Optionee shall deliver to
the Company written notice of its election to exercise all or part of
the Option, subject to the limitations provided herein, which notice
shall specify (i) the date and time for the exercise of the Option, and
(ii) the number of Option Shares in respect of which the Option is to be
exercised. The date specified in such notice shall be a business day and
the time specified shall be during the regular business hours of the
Company.
3.4 The Optionee shall, at the date and time specified in such
notice, pay the Company cash or other consideration acceptable to the
Company, at the principle office of the Company, the Option Price for
the Option Shares in respect of which the Option is being exercised, to
wit, the amount of the product of $4.75 (or such then adjusted exercise
price) times the number of Option Shares (subject to Section 3.2 of this
Stock Option Agreement) into which the Option is being exercised. The
notice and payment shall be delivered in person or shall be sent by
registered mail, return receipt requested, to Xxxxxxxx X. Xxxxx, the
Secretary of the Company, 000 Xxxxxxx Xxx., Xxxxxxxxx Xxxxxxx, Xxx
Xxxxxx 00000. The Company shall as soon as practicable and with all
due expedition deliver to the Optionee, who shall so have properly
exercised the Option, certificates registered in the name of such
person representing the number of Option Shares in respect of which the
Option was exercised, subject to the approval of any governmental or
regulatory authority required in connection with the authorization,
issuance, sale or transfer of such Option Shares. Delivery shall be
deemed effected for all purposes when the Company's stock transfer agent
shall have deposited such Option Share certificate or certificates in
the United States mail, addressed as per the Optionee's notice. If the
Option is only exercised in part, a new Option for the balance of the
unexercised Option Shares will be issued by the Company to the Optionee.
3.5 The Optionee shall not have any rights and privileges of a
shareholder of the Company in respect of any of the Option Shares under-
lying the Option unless and until and only to the extent it shall have
properly exercised the Option and paid for the Option Shares in ac-
cordance with the terms and provisions of this Stock Option Agreement.
The Option shall be considered exercised on the date the notice and
payment are delivered to or received by the Secretary of the Company;
provided if payment is by check, the exercise date shall be the date
such check clears payment. The Optionee shall have no rights with
respect to such Option Shares not expressly conferred by this Stock
Option Agreement.
RESTRICTIONS ON EXERCISE OF OPTION AND SALE OF STOCK
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4.1 In addition to the limitations on the exercise of an Option
as provided herein, the within Option shall not be exercisable if:
(a) The exercise thereof will involve a violation of any
applicable federal or state securities law; or
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(b) The exercise thereof will require registration under the
Securities Act of 1933, as amended, (the "Act") of the Option Shares or
other securities of the Company to be purchased by the Optionee pursuant
to such exercise.
4.2 (a) The Optionee acknowledges that the Option and Option
Shares are not transferable without compliance with the registration
requirements of the federal and state securities laws or an opinion of
counsel for the Optionee has been received by and is acceptable to the
Company and its counsel to the effect that such registration is not
required; any determination in this connection by the Company shall be
final, binding and conclusive; that the Optionee has no right to trans-
fer either the Option or the Option Shares except as provided in
Sections 4.2(c) and (d) below.
(b) The Optionee understands that the Option and the Option
Shares issuable upon exercise of the Option are being issued to it pur-
suant to a non-public offering exemption under the Act, that the Option
Shares issued upon exercise of the Option shall have a legend on the
face thereof indicating the restrictive nature of the Option Shares in
pertinent part as follows: "The shares of Common Stock represented by
this certificate have not been registered under the Securities Act of
1933 or under the securities laws of any state and may not be sold or
transferred except upon such registration or upon receipt by the Company
of an opinion of counsel satisfactory to the Company that registration
is not required"; and that such Option Shares and the Option shall have
stop transfer instructions issued against the same.
(c) For a period of one (1) year from the date the Option is
fully paid for, if the Optionee desires to register under the Act no less
than 100,000 Option Shares under the Act under circumstances that a
public distribution within the meaning of the Act of such Option Shares
will be involved, then the Company will, as promptly as practicable of
the receipt of such notice, file a registration statement pursuant to
the Act so that the Option Shares may be publicly sold, and the Company
will use its best efforts to cause such registration to become and remain
effective in order for the Optionee to publicly sell the Option Shares;
provided that the Optionee shall furnish the Company with appropriate
information in connection with the registration of the Option Shares as
the Company may reasonably request; and provided, further, that the
Company shall not be required to file such a registration on more than
one occasion. The Company shall supply prospectuses in order to facili-
xxxx the public sale of the Option Shares, use its best efforts to
register and qualify any of the Option Shares for sale in such states
as the Optionee requests, provided such qualification is not solely for
the purposes of subjecting the Company to jurisdiction in that state or
is not unduly burdensome.
The Company shall bear the entire cost and expense of the
registration of the Option Shares, except for fees and expenses of the
Optionee's counsel and other advisors and any selling expenses and com-
missions or underwriting discounts applicable to the offer and sale of
the Option Shares by the Optionee pursuant to the registration statement,
including any transfer taxes relating to the Option Shares sold.
(d) Whenever pursuant to Section 4.2(c) a registration state-
ment relating to the Option Shares is filed under the Act, or is amended
or supplemented, the Optionee will indemnify and hold harmless the
Company, each of its directors, each of its officers who have signed
said registration statement and such amendments and supplements thereto,
and each person, if any, who controls the Company (within the meaning of
the Act) against any losses, claims, damages or liabilities to which the
Company or any such director, officer or controlling person may become
subject under the federal or state securities laws, or otherwise, insofar
as such losses, claims, damages or liabilities (or
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actions in respect thereof) arise out of or are based upon any untrue or
alleged untrue statement of any material fact contained in any such
registration statement or any preliminary prospectus or final prospec-
tus constituting a part thereof, or any amendment or supplement thereto,
or arise out of or are based upon the omission or the alleged omission
to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to
the extent, but only to the extent that such untrue statement or alleged
untrue statement or omission was made in said registration statement,
said preliminary prospectus, said final prospectus or said amendment or
supplement in reliance upon and in conformity with written information
furnished by the Optionee for use in the preparation thereof; and will
reimburse the Company or any such director, officer or controlling
person for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action.
4.3 At the time of any exercise of the within Option, the Optionee
shall represent to and agree with the Company in writing that it is
acquiring the Option Shares for the purpose of investment and not with a
view to distribution, subject to Section 4.2(c).
4.4 Subject to Section 4.2(c), the Optionee agrees that it will
not sell, assign, pledge, gift, hypothecate, transfer or otherwise
dispose of any of the Option Shares or the Option at any time under
circumstances which would require the filing of a registration state-
ment in respect of such Option or Option Shares or under the provisions
of the Act.
4.5 The Company shall not be obligated to take any other affirma-
tive action in order to cause or facilitate the exercise of the Option
or the issuance of Option Shares pursuant thereto to comply with any
state or federal law, rule or regulation.
CHANGES IN CAPITAL STRUCTURE
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5.1 Existence of this Option shall not impair the right of the
Company or its shareholders to make or effect any adjustments, recapi-
talizations, reorganizations or other changes in the Company's capital
structure or its business, or any merger of consolidation of the Company
or the dissolution or liquidation of the Company, or any sale or transfer
of all or any part of its assets or business, or any issue of bonds,
debentures, preferred or prior preference stock ahead of or affecting the
Common Stock of the Company, or any grant of options on its securities
through any qualified or non-qualified stock plan or otherwise, or any
other corporate act or proceeding, whether of a similar character or
otherwise.
5.2 Except as hereinafter expressly provided, the issuance by the
Company of shares of Common Stock of any class, for cash or property, or
for labor or services, either upon sale or upon the exercise of rights
or warrants to subscribe therefor, or upon conversion of shares or obli-
gations of the Company converted into such shares or other securities,
shall not affect, and no adjustment by reason thereof shall be made with
respect to, the number, class or price of the Option Shares then subject
to the Option.
5.3 The only adjustment available to the Option Shares are as
follows:
(a) If at any time or from time to time after the date of
this Stock Option Agreement, the Company shall distribute to the
holders of its Common Stock, with respect to the Common Stock, without
payment therefor, securities or property, other than shares of the
Common Stock, other than rights to purchase shares of the Common Stock
which terminate prior to the exercise of this Option, and other than
cash, then, and in each such case, the Optionee upon the proper and
timely
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exercise of this Option, shall be entitled to receive the securities
and properties to which it would have been entitled had it been a
shareholder of record of the Option Shares received upon such exercise
of the Option at the time the Company made such distribution of secur-
ities or property and had, during the period from the date of this
Option to and including the date of such exercise, retained such shares
and the securities and properties receivable by it during such period.
Notice of each such distribution shall be forthwith mailed to the
Optionee.
(b) If the Company shall be consolidated with or merged into
another corporation or shall sell all or substantially all of its assets
as part of a reorganization within the meaning of the Internal Revenue
Code or shall reclassify or organize its capital structure (except a
stock split or combination covered by subparagraph (a) hereof), and in
such transactions holders of the Common Stock exchange their Common
Stock for shares of stock or other securities ("Transaction Securities")
of the Company or another corporation, receive additional Common Stock
or other securities, or surrender a portion of their Common Stock, then:
(1) Except as provided in Section 5.3(b)(2) hereof, the
Optionee shall be entitled, in lieu of the Option, to an Option or
Options to purchase Transaction Securities in an amount (if any) equal
to the Transaction Securities that the Optionee would have received if
the Optionee had exercised the Option in full and held the Option Shares
to which the Option related at the time of such transaction. The Option
Price per share or other unit of such Transaction Securities shall be
determined by dividing the Option Price by the number of shares or other
units (or the fraction of a share or other unit) of Transaction Securi-
ties into which each share of common stock is converted or for which
common stock is exchanged in such transaction.
(2) Notwithstanding any other provision hereof, the board
of directors of the Company may cancel the Option as of the effective
date of any transaction described in this Section 5.3(b); provided that
(A) notice of such cancellation shall have been given to the Optionee at
least thirty (30) days before the effective date of such transaction, and
(B) the Optionee shall have the right to exercise the Option in accordance
with and pursuant to the limits of Section 3.2 hereof during the thirty
(30) day period immediately preceding the effective date of such transac-
tion.
MISCELLANEOUS
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6.1 The granting of this Option shall not impose upon the Company
any obligation to employ, retain or become affiliated with or continue
to employ, retain or be affiliated with the Optionee. This Stock Option
Agreement shall not be construed as preventing nor shall it prevent the
Company from terminating any agreement or other affiliation with the
Company or its affiliated companies that might exist with the Optionee.
6.2 This Stock Option Agreement shall be binding upon and inure to
the benefit of the Company and its successors and upon the Optionee and
its successors, assigns, including without limitation the estate of the
Optionee and the executors, administrators and/or trustees of such
estate, and any creditor, receiver, trustee in bankruptcy or representa-
tive of any such Optionee; provided that the within Option shall be non-
transferable by the Optionee, and shall not be encumbered in whole or in
part, and the Option shall be exerciseable only by the Optionee except as
may be approved by the Company.
6.3 This Stock Option Agreement shall be deemed to be made under
and shall be construed in accordance with the laws of the State of New
Jersey.
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6.4 This Stock Option Agreement shall become effective as of the
date hereof and shall remain in effect through May 17, 1999. No mod-
ification or amendment of this Stock Option Agreement shall become
effective until such modification or amendment shall have been approved
by the board of directors of the Company.
6.5 The Company's obligation to deliver Option Shares is subject
to all the terms and conditions of this Stock Option Agreement and shall
be subject to applicable federal, state and local tax withholding and
reporting requirements.
IN WITNESS WHEREOF, the Company and the Optionee have each caused
this Stock Option Agreement to be executed by its President, Vice
President, or Secretary thereunto duly authorized, the day and year
first above written.
TECHDYNE, INC.
By----------------------------------
Xxxxxx X. Xxxxxxxx,
Chairman of the Board
The Optionee hereby accepts and agrees to be bound by all the
terms and conditions hereof.
XXXXXX XXXXXX & COMPANY, INC.
(Optionee)
By----------------------------------
Xxxxxx Xxxxxx, Chief Executive
Officer
Date: May 18, 1998
